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In December 2009, 10 employees from the technology company Square moved into an empty corner of the San Francisco Chronicle building at Fifth and Mission. The space had been stripped bare, but Square gave it touches of startup chic: rows of Apple computers, a sparkling-water dispenser, chandeliers designed by Jonathan Adler.

Square, a mobile payment firm headed by the Twitter co-founder Jack Dorsey, now has 100 employees packed into what used to be The Chronicle’s human resources department. It is thriving alongside a social entrepreneurship collective, a digital art gallery and other startups that signed leases over the past 18 months with Hearst, the Chronicle’s parent company and the building’s owner.

These success stories contrast starkly with the fortunes of the newspaper. After years of declining circulation and advertising revenue, San Francisco’s most influential paper is finding itself increasingly isolated in the building it has called home since 1924.

The Chronicle building’s continuing transformation is a dramatic example of how the San Francisco economy is changing — even under one roof. With the Chronicle literally shrinking, Hearst and its Cleveland-based developer, Forest City Enterprises, are embarking on a plan to turn a 4.5-acre block around the newspaper — including idled printing facilities — into a commercial and residential campus for innovation.

The developers envision replacing the parking lots and warehouses around the Chronicle building with buildings housing startups, all connected by spruced-up alleys and open-air plazas.

“A lot of people just assume it’s only one building, but we’re creating an ecosystem that lives and breathes art and entrepreneurship,” said Alexa Arena, the Forest City vice president who is leading the project. (Forest City was the development partner for the Manhattan headquarters of The New York Times Company.)

Charles A. Fracchia, president of the San Francisco Historical Society, said it was “ironic” that Hearst appeared to be giving over the Chronicle building to tech firms.

“This is about organic changes in urban life coupled with the fact of always-changing technology,” Fracchia said. “The utilization of that space for a dying newspaper, in their eyes, just doesn’t pencil out.”

The age of the building, its monolithic presence south of Market Street, and lingering sentimentality about the Chronicle could present obstacles to Forest City’s plans, according to some city officials. They said the company has privately told them it envisions building several office towers as tall as 400 feet, which could come under opposition from neighborhood groups.

Anticipating a long and politically tricky process, Forest City is quietly courting City Hall and local residents and assembling a powerhouse stable of architects, housing experts and lobbyists — even as the Chronicle’s remaining staff members ponder whether the paper will ultimately be evicted from its home.

Frank J. Vega, the Chronicle’s chairman and publisher, said in a statement that the newspaper and its website, SFGate.com, “will occupy the building at Fifth and Mission for the foreseeable future.”

Forest City hired a firm headed by two former chiefs of the Office of Economic and Workforce Development under Mayor Gavin Newsom to consult on the project. It also hired Charles E. Chase, president of San Francisco’s Historic Preservation Commission, to review the building’s historical preservation status.